Funds Management

Multi-Manager Portfolios

Building a multi-manager portfolio is not simply a matter of choosing products with the highest alpha potential. The alpha of the managers, the correlation and risk among alphas, and the risk characteristics of the asset allocation benchmark all must be considered. Wilshire was an early practitioner of the technique of optimizing all these factors to produce an efficient combination of managers seeking to maximize expected return for each given level of risk.

Keeping an eye on performance

Wilshire Funds Management employs a dedicated team of portfolio managers with the goal of positioning every portfolio to minimize unintended risks. Our institutional experience teaches us that the essence of investment management is the management of risks, not the management of returns.

Looking beyond historical returns

Skilled investors know that a manager’s past performance does not predict their future results. To truly understand a manager’s skill requires the ability to strip out returns attributable to the market, style effects, and other factors embedded in their portfolio. Wilshire’s manager research process is designed to identify managers who have a consistent, repeatable, and sustainable ability to produce alpha on a forward-looking basis.

Qualitative depth/quantitative breadth

Wilshire’s process begins with a large database of over 8,000 investment products that are screened based on quantitative factors to arrive at a short list of managers. Wilshire’s manager research team conducts in-person, telephone, and onsite meetings with investment managers on this list. In 2014, the team conducted approximately 1,600 such meetings. The result is an evaluation based on six key factors:

Organization/Team

Information gathering

Forecasting

Portfolio construction

Implementation

Attribution

Oversight and monitoring

Wilshire frequently refines our capital market assumptions and reallocates portfolios accordingly to maintain the optimal risk and return balance. Holdings and returns-based analyses are conducted on a regular basis to monitor and assess each portfolio’s performance, risks, and positioning. Monitoring includes regular meetings with each underlying fund’s investment management team. Wilshire’s role in the investment industry allows us to be among the first notified by investment managers of any organizational, investment team, or process changes—allowing us to make effective and timely decisions.